HBO’s Silicon Valley episodes 7 through 10 have our team struggling with a patent troll, mergers, challenges and far too many twists. Here is our legal advice to the Pied Piper team.
Season 4, Episodes 7-10 Recap (Contains Spoilers)
In an episode made exclusively for these articles, the Pied Piper team has to go up against a patent troll (an attorney or company that makes its money by suing other companies for patent infringement). After failing to get his fellow app-owners behind him, Richard ninjas a last minute fix reminiscent of the incoherently serendipitous ending of War of the Worlds.
To raise additional money and pay for their storage costs, the team tries to convince VR wunderkind, Keenan Feldspar, to subscribe to their service. Although he readily agrees, he also convinces Gilfoyle and Dinesh to install Pied Piper’s proprietary and revolutionary technology into his VR program. After numerous offers and counter-offers, Feldspar agrees to buy Pied Piper for $25 million, only to back out last minute and sell his company to Hooli.
More desperate than ever, Pied Piper decides to go rogue, hack into Hooli-Con and force its unwitting attendees to act as a decentralized server farm for their platform. Throwing caution to the wind, they consult a convicted hacker, sneak into Hooli-Con pretending to be vendors and surreptitiously distribute routers all over the place to hack the attendees’ phones. After being caught due to Richard’s personal neuroses, they are let go by a mistreated head of security.
What happens when you take a Hooli phone, add Feldspar’s VR technology and Pied Piper’s malware? The phone blows up. As a result, Hooli did a full recall of all 9 million phones, leaving Pied Piper without their phone-server farm and no way to host their data.
The last episode of the season had less of a plot and more of a descent into chaos as Richard shed the remains of his morality in a series of ever more risky schemes to keep his mismanagement from being exposed. After these schemes invariably failed, the team reunited for one last time in order to come clean and face the consequences, only to be saved, deus ex machina style, with some nonsensical explanation involving smart fridges.
Also, Gavin is back.
Legal Analysis / Advice*
Patent trolls are real. Although they are usually not semi-retired attorneys who don’t know the difference between a flash drive and CD, they do make their money by suing other companies who have anything even closely resembling their patents.
The patent troll episode correctly showed what happens when Richard attempted to “handle it” himself. Unfortunately, when Richard defeats the troll after discovering a secret loophole, the episode perpetuates the myth that, when it comes to the law, the smartest person always wins.
In reality, the people who start their own technology companies are brilliant. They are revolutionary thinkers that test the boundaries of how society works and often make it better. These feats do not make them good lawyers. A lawsuit is made of meticulous procedures, deadlines, and more procedures. This is why being the smartest person in the room doesn’t mean you know how to draft a contract, a partnership agreement, or successfully handle a lawsuit. If this one simple fact could hit home, there would be far fewer lawsuits in Silicon Valley.
Confidentiality / Fiduciary Duties
Monica continues to be her own worst enemy when she decides to reveal to Richard insider information about Feldspar’s company. This undoubtedly violates the NDA signed by her company and puts herself and the new VC firm in jeopardy of a major lawsuit. Given that she is now part-owner of the VC firm, she is not only breaching a duty of loyalty to her employer, but also violating her fiduciary duty to her partners, her employees, and their investors.
However, none of Monica’s actions even come close to Richard’s, who somehow manages to undermine his company, partners, and employees at every turn, usually due to personal insecurities.
More importantly, Pied Piper proprietary technology appears to still be sitting on Feldspar’s (now Hooli’s) technology. Confidential and proprietary technology only remains a secret if the company that owns it takes reasonable steps to keep it private. When Pied Piper’s co-owners (Gilfoyle and Dinesh) voluntarily gave the technology to Feldspar, they make it far more difficult to argue that their technology is still confidential.
While having a valid patent will help, they should have immediately clawed back their disclosures and put an agreement in place identifying who their technology belongs to and how it can be used.
Since I no longer practice criminal law (I used to be a deputy district attorney), I will not go too far into all of the crimes the Pied Piper team seems bent on committing; that said, I can’t help but share a quick list:
First, Erlich cannot set a large fire in his backyard, even if it is his own property that he’s burning.
Second, stealing Stanford University’s storage is a cybercrime
Third, Pied Piper should not have hacked into unsuspecting people’s phones, thus turning those phones into time bombs. And despite Jared’s protests, since he was fully aware of their actions, and actively helped in creating a diversion while the routers were setup, he would be considered an accomplice and could be held criminally liable to an equal extent with Richard and the rest of the team.
*As a disclaimer, since the characters and situations aren’t real, neither is my advice.These posts are meant to demonstrate to entrepreneurs that doing their own legal work makes about as much sense as standing up to one of Daenerys’ dragons; you will get burned.